Competition Bureau sues Bell, Rogers, Telus $10-million each

Federal competition authorities are suing the country’s three biggest wireless providers for a combined $30-million, alleging the carriers allowed third-party companies to “mislead” mobile subscribers into hefty fees of which they then took a share.

In separate suits filed Friday in the Ontario Superior Court of Justice, the Competition Bureau is seeking $10-million each from Rogers Communications Inc., BCE Inc. and Telus Corp. — the maximum penalty allowed under law.

The bureau is also suing the Canadian Wireless Telecommunications Association, the sector’s lobbying body, for $1-million in an administrative penalty for “facilitating premium text services.”

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The legal action follows a five-month investigation into whether companies offering text-based promotions and services were appropriately disclosing the costs of those “premium” services to Rogers, Bell and Telus customers.

“Our investigation revealed that consumers were under the false impression that certain texts and apps were free,” bureau commissioner Melanie Aitken said. “Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills.”

A spokesman for the bureau said the enforcement body has asked the carriers to stop the practice and has kept its investigation open.

The CWTA, which had known of the bureau’s intentions to move on the matter for several weeks, immediately issued a lengthy statement condemning the filings as “adversarial” and of “no net benefit to consumers.”

Bernard Lord, CWTA president and CEO said responsibility for disclosing costs resides with the third-party entities selling the text-based services, not the carriers that own the networks over which their services run. “They’ve identified them, they know who they are but they chose not to go after them. Instead they chose to go after the carriers,” Mr. Lord said.

Meanwhile, despite allowing the same services to access their subscribers, smaller independent operators such as Wind Mobile and Mobilicity were not targeted by Ms. Aitkens, who is stepping down Sept. 21.

The CWTA approached the bureau in April 2011 about developing safeguards to protect its customers. “We wanted to know what they could do, and what help we could provide,” Mr. Lord said. The bureau notified Rogers, Bell, Telus and the CWTA in August that new measures had to be enacted or each faced litigation.

Premium text services, a term that blankets a wide range of products from weather updates and daily horoscopes to promotions about voting in talent contests such as Canadian Idol, can cost a wireless user as much as $10 for individual transactions and $40 for a monthly fee.

The root of the problem is the unscrupulous operators that say they’ll abide by the rules and then don’t

Most companies that sell the text-based services operate legitimately, wireless industry executives say, but a minority have designed their services to mask hidden charges. A bureau spokesperson said carriers skim between 27% and 60% of the fees that are generated from such activity.

Telus, the third-largest provider in the country, said the revenue collected was to recoup costs for carrying out the exchange.

“The root of the problem is the unscrupulous operators that say they’ll abide by the rules and then don’t,” Shawn Hall, a spokesperson for Telus said. He said the company, which plans to challenge the suit, may ban all premium text services.

“We do not have the authority to regulate false advertising, but the Competition Bureau does,” he said.